Cities and agricultural transformation in Africa: Evidence from Ethiopia

Due to the rapid growth of cities in Africa, more rural farmers are providing staple foods to urban residents. However, empirical evidence on how urbanization affects these farmers is scarce. To fill this gap, this paper explores the relationship between proximity to a city and the production behavior of rural staple crop producers. More in particular, we analyze data from teff producing farmers in major producing areas around Addis Ababa, the Ethiopian capital. We find that farmers more closely located to Addis Ababa face higher wages, land rental rates, and teff prices, leading to better incentives to intensify production as seen in the uptake of modern inputs. Moreover, we observe that land and labor productivity as well as profitability in teff production improve with urban proximity. Our results suggest that better connectivity of rural farmers to cities and growing urban demand for food are important associates of the process of agricultural intensification and transformation in Ethiopia.